As of Friday March 5, 2010, there are fifteen (15) significant condominium and planned community related bills pending at the Arizona Legislature.  The Bills and their status are as follows:

As of Friday February 26, 2010, there are fifteen (15) significant condominium and planned community related bills pending at the Arizona Legislature.  The Bills and their status are as follows:

HB2768 (HB2768 Committee Amendment), if enacted, would render unenforceable, provisions in Declarations or covenants (“CC&Rs”) that obligate the transferee (the buyer) or the transferor (the seller) to pay a fee or other charge to a declarant (the developer of the real estate or condominium project) or a “third person” upon the transfer or for permitting the transfer of ownership of the property.  There is an exception.  If the fee is to an “association” it can be used for the purposes set forth in the “document” (presumably the CC&Rs) so long as the money does not go to a third party.  HB2768, in its Introduced Version, limits this to $500 but the $500 cap was removed by the House Government Committee at a hearing on February 16, 2010.  So what is HB2768’s potential impact?  (Here is an interesting ABA article on the topic that HB2768 is apparently attempting to address.  Thank you to Andrew Fortin, Vice President, Government & Public Affairs, Community Associations Institute,www. caionline.org, for forwarding the article). 

Currently, there are three types of fees that are charged in the sale of condominium units and planned community lots in Arizona:

1.  “Resale Disclosure Statement Fees.”  These fees are charged to reimburse the condominium or planned community association for the cost incurred in providing a resale disclosure statement to potential buyers.  The fee must be reasonable and the information required is mandated by statute.  See A.R.S. 33-1260(c) and 33-1806(c).  Since this fee is charged pursuant to and explicitly authorized by statute and is not charged pursuant to what is in a “Declaration” or “covenant”, it is doubtful that HB2768 would restrict these fees charged in routine sale transactions. 

2.  “Transfer Fees.”  After or at a typical sale transaction closing, many community associations charge a “transfer fee” that is separate and apart from the “resale disclosure fee” set forth above.  The transfer fee is authorized pursuant to A.R.S. 10-3302(16) to reimburse the condominium or planned community association for the costs of completing the transfer (sending the new owner a welcome packet, changing the ownership records, etc.)  Because this fee is authorized by statute, it is doubtful that HB2768 would restrict these fees charged in routine sale transactions. 

3.  “Resale Assessments.”  These assessments, payable to a condominium or planned community association, are found in “Declarations” or CC&Rs and would be prohibited by HB2768 unless they are $500 or less (or unless the amendment to HB2768 suggested by the House Government Committee removing the $500 cap is adopted).  “Resale Assessments” rarely go by the name “Resale Assessments” in Declarations or CC&Rs and are more commonly referred to as, “Working Capital Assessments”, “Community Enhancement Fees”, Capital Improvement Fees”, “Reserve Assessments”, etc. 

Planned community and condominium associations are “third parties” to the typical sales transaction (the seller is the “first party” and the buyer is the “second party”).  Therefore, planned community and condominium associations are justifiably concerned about HB2768.  Professional community association management companies, likewise, are “third parties” and are legitimately concerned that HB2768 is an attempt to force the preparation of statutorily required resale disclosure statements and the work involved in facilitating a transfer for no compensation.  However, with the removal of the $500 cap on payments directly to community associations, and with the arguable inapplicability of HB2768 to statutorily permitted fees for facilitating a transfer (A.R.S. Section 10-3302(16)) and for the preparation of a resale disclosure statement (required by A.R.S. 33-1260 and 33-1806), the impact of HB2768 on community associations and their professional management companies, if adopted, is unknown.  Given that uncertainty, poor drafting of HB2768 and its lack of reference to the statutorily permitted fees, it will not be surprising that community associations and professional community association management companies will likely argue against HB2768 at the Arizona Legislature.

As of Friday February 19, 2010, there are fifteen (15) significant condominium and planned community related bills pending at the Arizona Legislature.  The Bills and their status are as follows:

Representative Young Wright, nyoungwright@azleg.gov, has introduced HB 2778 at the Legislature.   A copy of the bill can be obtained by clicking HERE.    

HB2778 has been assigned to the House Government and House Rules Committees.   There are no hearings scheduled at this time.   

In its Introduced Version, HB2778 would prohibit condominium and planned community associations from prohibiting (although some aesthetic input is permitted) systems that collect rainwater as a “water saving device.”  Obviously, there are significant problems with this concept in condominiums.  Can a second floor unit owner install a cistern on their balcony?  Would this require the condominium association to make the “common element” roof available for rainwater collection systems?

Representative McGuire, bmcguire@azleg.gov, has introduced HB 2783 at the Legislature.   A copy of the bill can be obtained by clicking HERE.    

HB2783 has been assigned to the House Government and House Rules Committees.   There are no hearings scheduled at this time.   

In its Introduced Version, HB2758 would not permit a condominium or planned community to regulate the minimum or maximum rental period for rentals in an condominium or planned community where rentals are otherwise permitted.  This is another version of the “nightly rentals are good” bill and the source of the comment, “What’s next – rooms by the hour?”

The HB2153 House Engrossed Version now moves to the Senate.  It will likely be assigned to the Senate Government Committee but has not yet been assigned.

HB2615  was heard in the House Military Affairs and Public Safety Committee on February 17.  The Committee voted 6-1-1 to recommend that the House pass HB2615.

The HB2345 Strike Everything Amendment  was heard in the House Government Committee on February 16.  The Committee voted 9 to 0 to recommend that the House pass the “Strike Everything” version of HB2345.

HB2768 was heard in the House Government Committee on February 16.  The Committee voted 9 to 0 to recommend that the House pass HB2768.   The committee vote included recommendation of amendments as follows:  

Removes the $500 cap provided in the bill regarding a fee or charge for association levies.

Adds an additional exception regarding any consideration payable by the transferee to the transferor for the interest in real property being transferred, including any subsequent additional consideration for the property payable by the transferee based on any subsequent appreciation, development or sale of the property.